VAT: change to zero-rating of 'qualifying' aircraft
The measure
This measure was announced at Budget 2010.
The measure will change the definition of aircraft which can be supplied at the
zero rate of VAT. It will change from one based on weight and usage to one based
on the status of the customer.
Zero-rating will only apply to supplies of aircraft used by commercial airlines,
primarily on international routes.
Who will be affected?
- Suppliers of aircraft
- Suppliers of parts and services for aircraft
- Aircraft operators
When?
The change will apply to all such supplies made on or after 1 January 2011.
Our view
This measure was expected, as it aligns the UK definition of 'qualifying' aircraft with the EU VAT Directive following the commencement of infraction proceedings by the European Commission against the UK in the Autumn of 2008.
